Friday, May 24, 2013

George Soros : Success could lead to a positive resolution of the Euro Crisis.

QUESTION: The lack of access to credit on equal terms creates an uneven
playing field. This is a handicap for different countries and makes it
more difficult for them to regain competitiveness. What should be done?

SOROS:
It is important to recognize that this disadvantage consists of two
components. One is the cost of borrowing by the government, and the
other is the cost of borrowing by the private sector. Recently, since
the Cyprus rescue, the private sector’s disadvantage, particularly for
small and medium-size enterprises (SMEs), increased to crisis
proportions. Fortunately, the authorities recognize this. The European
Central Bank is discussing the possibility of using its resources to
help resolve this problem. And it is very, very important what they come
up with. I am hopeful that they will produce a scheme that could make a
difference. If you could package the loans to SMEs and refinance them
at the ECB on equal terms, that would mean that enterprises south of the
Alps would be able to borrow on more or less equal terms with
enterprises north of the Alps. That would be a game-changer.

I
am sure that this will be resisted on legal grounds. I am not in a
position to follow the battle within the ECB from the outside, but what
the outcome will have a major influence on the future course of events.

It
should not escape your attention that if the ECB succeeded in making
credit available on equal terms, it would effectively mean a large-scale
mutualization of rather risky debts. Once that happened, it would make
sense to mutualize government debts as well. Guarantees have a peculiar
feature: the more comprehensive and convincing they are, the less likely
they are to be invoked and to result in losses. So the securitization
of SME loans could be an indirect route to Eurobonds. It would certainly
be a step in that direction. That is why it is bound to be resisted.
But success could lead to a positive resolution of the euro crisis.

Jim Rogers, a native of Demopolis, Alabama, is an author, financial
commentator and successful international investor. He has been
frequently featured in Time, The Washington Post, The New York Times,
Barron’s, Forbes, Fortune, The Wall Street Journal, The Financial Times,
and most publications dealing with the economy or finance.

After attending Yale and Oxford University, Jim Rogers co-founded the
Quantum Fund, a global-investment partnership. During the next 10 years,
the portfolio gained 4200%, while the S&P 500 rose less than 50%.
Rogers then decided to retire – at age 37.

In 1990-1992, Jim Rogers fulfilled his lifelong dream: motorcycling
100,000 miles across six continents, a feat that landed him in the
Guinness Book of World Records. As a private investor, he constantly
analyzed the countries through which he traveled for investment ideas.
He chronicled his one-of-a-kind journey in Investment Biker: On the Road
with Jim Rogers. Jim also embarked on a Millennium Adventure. He
traveled for 1101 days on his round-the-world, Guinness World Record
journey. Passing through 116 countries, he covered more than 245,000
kilometers, which he recounted in his book Adventure Capitalist: The
Ultimate Road Trip. His latest book "A Gift to My Children: A Father's
Lessons for Life and Investing" was published in 2009.

George Soros was born in Budapest, Hungary, in 1930. His father was taken prisoner during World War I and eventually fled from captivity in Russia to reunite with his family in Budapest. Soros was thirteen years old when Hitler's Wehrmacht seized Hungary and began deporting the country's Jews to extermination camps. In 1946, as the Soviet Union was taking control of the country, Soros attended a conference in the West and defected. He emigrated in 1947 to England, supported himself by working as a railroad porter and a restaurant waiter, graduated in 1952 from the London School of Economics, and obtained an entry-level position with an investment bank.

In 1956, Soros immigrated to the United States, working as a trader and analyst until 1963. During that time, he developed his own theory of markets called 'reflexivity', which he has laid out in his recent books THE ALCHEMY OF FINANCE and THE CREDIT CRISIS OF 2008 AND WHAT IT MEANS. In 1967 he helped establish an offshore investment fund; and in 1973 he set up a private investment firm that eventually evolved into the Quantum Fund, one of the first hedge funds, through which he accumulated a vast fortune.

George Soros is a self-described student of Karl Popper, and strong opponent of totalitarianism. He has devoted much time to philanthropy — among other projects, founding the Open Society Institute in 1993 — and, after 2001, to US domestic politics, donating millions of dollars to Democratic candidates and liberal 527 organizations and earning political enmity in the process. Soros has published numerous books, including THE CREDIT CRISIS OF 2008 AND WHAT IT MEANS; THE AGE OF FALLIBILITY: CONSEQUENCES OF THE WAR ON TERROR (Public Affairs, 2006); THE BUBBLE OF AMERICAN SUPREMACY (2005); GEORGE SOROS ON GLOBALIZATION (2002); OPEN SOCIETY: REFORMING GLOBAL CAPITALISM (2000); THE CRISIS OF GLOBAL CAPITALISM: OPEN SOCIETY ENDANGERED (1998); SOROS ON SOROS: STAYING AHEAD OF THE CURVE (1995); UNDERWRITING DEMOCRACY (1991); OPENING THE SOVIET SYSTEM (1990); and THE ALCHEMY OF FINANCE (1987). His essays on politics,